HBC, the dad or mum firm of Saks Fifth Avenue, has agreed to accumulate Neiman Marcus Group, the dad or mum firm of Neiman Marcus and Bergdorf Goodman, in a $2.7 billion deal.
Upon completion of the transaction, HBC will set up Saks World, merging luxurious retail and actual property property. Present Saks.com CEO Marc Metrick will develop into the CEO of Saks World.
Saks Fifth Avenue, Saks OFF 5TH, Neiman Marcus and Bergdorf Goodman will proceed to function underneath their respective manufacturers.
The acquisition can be financed by way of a mixture of fairness from new and present shareholders and debt amenities. Amazon can be a minority proprietor in Saks World and collaborate to drive innovation for patrons and model companions post-transaction. Rhône Capital would be the lead investor. Perception Companions and Salesforce may also develop into shareholders.
HBC secured a $1.2 billion time period mortgage from Apollo-managed funding funds and a $2 billion revolving asset-based mortgage facility from a consortium of lenders, together with Financial institution of America, Citigroup, Morgan Stanley, RBC Capital Markets, and Wells Fargo.
A luxurious retail portfolio
Saks World will incorporate HBC’s and Neiman Marcus Group’s U.S. actual property property, amassing a $7 billion portfolio of prime retail properties in high luxurious purchasing places. Ian Putnam, presently president & CEO of HBC Properties and Investments, will develop into CEO of Saks World Properties and Investments.
The brand new entity plans to boost the luxurious purchasing expertise by investing in seamless entry to a variety of trend decisions throughout all channels, based on a launch. Leveraging the legacy of its retail manufacturers, it’ll advance on-line performance and success processes. Moreover, the agency goals to boost personalization utilizing first-party information and AI, creating individualized on-line purchasing experiences and enabling gross sales associates to higher serve prospects.
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Upon closing, HBC’s Canadian enterprise can be recapitalized as an unbiased entity with diminished leverage and elevated liquidity. HBC will retain full possession of its Canadian retail and actual property property.
Such an acquisition has been thought of for years, primarily due to the lower in NMG’s complete revenues. In 2013, the Canada Pension Plan Funding Board and personal fairness agency Ares Administration acquired NMG by way of a $6 billion leveraged buyout that changed previous debt from one other buyout in 2005, based on The Dallas Morning Information.
Challenged by the pandemic
In the course of the COVID-19 pandemic, Neiman Marcus initiated Chapter 11 restructuring proceedings within the U.S. Chapter Courtroom for the Southern District of Texas. Following the completion of this course of, Neiman Marcus efficiently diminished its debt by greater than $4 billion and lowered annual curiosity bills by $200 million.
The house owners on the time, which included PIMCO, Davidson Kempner Capital Administration and Sixth Avenue, funded a $750 million exit financing bundle that absolutely refinanced the debtor-in-possession mortgage and offered moreover liquidity.
The corporate additionally obtained a $125 million FILO facility led by Pathlight, which refinanced its debt and enhanced liquidity. Moreover, a number of lenders, together with Financial institution of America, have prolonged a $900 million asset-based lending facility.
Making the deal occur
M. Klein & Co. is serving because the lead monetary advisor and capital markets advisor to HBC on the acquisition of Neiman Marcus Group and associated financings, together with Solomon Companions. Elm Avenue Advisors is serving as strategic, industrial and operational advisor, Deloitte is working as monetary and tax advisor, whereas Willkie Farr & Gallagher LLP is serving as authorized counsel.
J.P. Morgan and Lazard are offering monetary recommendation to NMG. Sullivan & Cromwell LLP is representing the agency as authorized counsel, whereas Berenson & Co. acted as monetary advisor to Perception Companions.
